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Diageo plans Seagram bid
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August 18, 2000: 10:18 a.m. ET
U.K. firm, France's Pernod Ricard to make joint offer for spirits business
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LONDON (CNNfn) - Britain's Diageo PLC and Pernod Ricard SA of France joined forces Friday to bid for the Seagram Co. spirits empire, stirring up a potential takeover battle with U.K. rival Allied Domecq PLC for the maker of Chivas Regal scotch and Captain Morgan rum.
Diageo, the world's biggest spirits company, and its French ally said they plan to make an offer for Seagram's flagship wines and spirits unit, which industry analysts have valued at more than $7 billion. Seagram, a Canadian-based entertainment conglomerate, is shedding the division as part of its plans to merge with French utility and communications company Vivendi in a $34 billion pact.
"Diageo and Pernod Ricard announce that they have agreed to work together to make an offer for Seagram's wines and spirits business in the forthcoming disposal process," Diageo said in a brief statement.
No financial details of the planned bid were disclosed. Diageo said it "does not anticipate making any further announcement until the outcome of its interest in the process is determined."
A source close to Diageo and Pernod Ricard told CNNfn.com that the joint bid likely would be structured on a brand-for-brand basis, with Diageo buying some Seagram products and Pernod Ricard acquiring others. Seagram, the third-biggest spirits company globally, includes Martell cognac and Crown Royal Canadian whisky in its portfolio as well as the distribution license for Absolut vodka.
 Seagram is expected to officially put its drinks unit up for sale in an auction format following the completion of the Vivendi merger, which is expected to close in September, pending regulatory approval.
Diageo, the London-based maker of Smirnoff vodka and Johnnie Walker scotch, is expected to get a major cash infusion soon that could finance an acquisition. The company is selling its Pillsbury food unit to U.S.-based General Mills Inc. for $10.5 billion in stock and debt and plans to offer stock in its Burger King restaurants division.
Diageo earlier had been in talks with Bermuda-based Bacardi over a combined bid for the Seagram spirits unit, a source told CNNfn.com last week.
Paris-based Pernod Ricard has been on the acquisition hunt recently, but its plans last year to raise money by selling its Orangina carbonated soft drink unit to Coca-Cola were foiled after French regulators blocked the deal. The company's brands include Wild Turkey bourbon and Jameson Irish Whiskey.
Shares of Bristol, England-based Allied Domecq, initially considered the prime bidder for Seagram's spirits business, slid about 2 percent in London Friday as investors feared the company would be trumped. The stock fell 7.25 pence to 316.25 pence, paring earlier losses.
Allied Domecq spokeswoman Jane Mussared said Friday the Diageo-Pernod link-up "makes no difference to our plans at all."
The bidding process for Seagram has not officially begun, but "if it (the drinks business) were to become available, we would become very interested," she said.
Allied makes Ballentine's scotch whiskey and Kahlua liqueur and owns the Baskin-Robbins and Dunkin' Donuts food chains.
Diageo stock also lost ground Friday, falling 2.7 percent to 594.5 pence. In Paris, Pernod Ricard edged up 0.9 percent to  59 per share. 
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